Fallout for Chrysler from Cerberus and GM
General Motors and Chrysler may or may not merge. At this point, though, both will be weaker from the rumors that have been flying.
Analysts and journalists have been fairly unanimous in their belief that neither company deserves to live. The jobs of tens of thousands of people - hundreds of thousands when suppliers are added to the mix - are irrelevant, apparently, to those who deal in the financial world.
Chrysler has been almost universally described as having nothing of value but Jeep. Even the Chrysler Technical Center is leased. The Chrysler and Dodge brands are generally seen as worthless; those who know better referred to the upcoming V6, which has not yet reached production, as being inferior to just about anything made by just about anyone else.
At Chrysler, the dual-clutch automatics appear to have been dropped - or maybe just the factory was. Maybe Chrysler is planning to use excess GM capacity to build it. Hard to say — they’re still working on the Phoenix engines after reportedly/possibly dropping one of the factories.
General Motors was not treated much better, and now stories are flying around about who will take over GM. Will it be Volkswagen? Hyundai? Tata? There is now an assumption that GM cannot survive all by itself. Thanks to that assumption, GM might not be able to survive alone. Financiers are very good at making assumptions come true. (Remember how they were all dead certain DaimlerChrysler was a great idea?)
Chrysler… is pretty much a goner at this point. Cerberus can’t get its credibility back when they talk about being in it for the long haul. They showed what they really thought with this one. Pete DeLorenzo turned out to be right after all, at least about their eagerness to leave the deal with Daimler; on the other hand, I think their motivation is not fear of the auto industry, but their desire to get their hands on GMAC, and then get a fat bailout as payment for taking so many Party rejects on board.
There’s still a possibility we’ll get a GMopar. The current administration could arrange the financing; the Fed and Treasury are happy to print money for their friends. Sweetheart deals with these people would not be much of a problem since they’re not burdened by the same rules as ordinary mortals. The government has already said it would loan money to corporations if they had good balance sheets; this could be an exception. Politically one has to wonder about spending billions to eliminate tens of thousands of jobs, but a lame duck president and his probably-lame-duck Treasury and Fed officials might not care. A disaster to the United States - well, sure, but so what? There are plenty of nice apartments in Dubai.
Excuse me if I’m reaching here. I know I’m talking “what ifs.” My hope is that by talking about the “what ifs” with our Congressmen and Senators, they will not become reality. One senator has already called for the government to fund GM’s “rescue” of Chrysler (which I’m sure would end up like the “rescue” of Chrysler by Daimler.) People can actually suggest this with a straight face.
As for the future, again, Chrysler is gone. We have had a self fulfilling prophecy, so to speak. One moment the financial and business-reporting world was fine with Chrysler running under Cerberus, believing the claims that it was a long term arrangement; Jim Press would surely not knowingly lie to us. (As far as I know, he hasn’t.) However, it’s hard to still believe that now, and all the stories and speculation and snide remarks about Chrysler’s uselessness and lack of assets will both make it inevitable that the company be sold - and equally inevitable that it will be sold more cheaply than it would have before.
It seems sad that, a mere year after celebrating the exact same events happening to Daimler, we’re back to where we started - or far worse off. I still remember the euphoria of freedom from Daimler - and the crushing blow of Bob Nardelli taking over on top, with his Campi friend sabotaging suppliers. The roller coaster continues, with a few structural supports missing.
Not good news at all.What do you think if Chrysler had an alliance with Renault-Nissan would there be a possibility of Chrysler staying intact or is it a gonner either way.I really wanted to trade my 4 old Ram for a new model probably in 2010 as I would not have huge payments,but I guess that will never happen.I know people who would of bought Challenger’s from 6 months from now to 2 years from now,but this may be all gone. But I hope there is the last minute miracle,at least for loyal Chrysler fans.If G.M dismantles Chrysler I hope G.M realises that Chrysler people will NOT buy a G.M,Dodge trucks are far superior to Chevy’s and the Challenger actually looks like a car should not the ugly as sin new Camaro.Remember when Dodge quit the full size Ram van its sales did not go to G.M but Ford Econoline vans recieved a big boost,so If G.M destroys Chrysler ,Ford and the imports will benefit not G.M.
Dave, we discussed this AT LENGTH back when Cerberus reared its ugly three heads in seeking ownership of Chrysler. I have been dubious about them all along. And now, especially in the cold, dead, light of the current economic situation, I am more convinced that this was all part of an engineered destination. And YES… I am talking about letting the country burn down as well. Look who is large in there and who is in charge. Cerberus. BIG MONEY. BIGGER POWER. Politically connected beyond any reasonable doubt. No one is going to be able to figure it all out, UNLESS, of course, one of them, deeply involved, has a death bed confession of sorts. For which, it will be too late for the USA, and FAR, FAR too late for Chrysler. The hardest, most infuriating aspect of it all is that the self same so called “leaders” really have no connection to us, the people. And do not in any way give one good damn for people….. unless they are rich.
That does not mean the Democrat interpretation of “rich” being above 250K. Oh no. BIG RICH. RICH beyond comprehension. The Republican concept of rich. There are more out there than we know. And they hide 11 Trillion (estimated) out of this country. GM? Ford? Chrysler? Things to be legislated, taxed, spurned. No concept of the humanness of those very same places. Where being employed in one of them gives a sense of “place” of “being”, of making “life” a part of the greater whole in this place of “America.”
It is fast becoming obvious that it is coming down to “them” against “us” and it will devolve into ugliness quickly. A recent columnist panned John McCain, calling his remarks about people being “angry” as being incorrect. Not in touch, is what he alluded to. Wrong Mr. Columnist. People are not angry……… oh no… they are ugly furious, and ready to blow up. Read it well. Ask the person standing next to you, when you can afford to go to the grocery store how they feel right now. All I see is pure rage. This merger business is not going to help the people, and in no way can be good for anyone working for GM and Chrysler.
I can not imagine GM seeking to take over Chrysler, let along having approached Ford first! Other than the elimination of a competitor, and getting their paws into the 11 billion dollar bank accounts, what, pray, what is the point? Technology? Flex manufacturing? Dual clutch transmissions? Better engines? The reality is that GM cars are not all that bad, nor is Chrysler. Both companies produce reliable decent automobiles that deserve far, far, FAR more credit than is given them, here included!
The “news” and various media outlets, flowing black ink into the veins of politicians, have created an atmosphere that is absolutely poison for American cars. I believe that GMAC, controlled by Cerberus, is, has, and continues to play the devil’s advocate in some manner. IT IS ALL ABOUT THE MONEY. So, I believe I am absolutely correct that GM was lead to Chrysler, kicking, screaming, and dragging its feet all the way. Merge…. OR ELSE.
The GMAC that we have known for decades no longer exists. Most GM outlets won’t even suggest them for vehicle financing anymore! Think Cerberus is going to stand for that? A prime income being spurned by the major player that used to back the finance arm. I think not.
Cerberus with all of its ugly heads reared, all their red eyes glaring, and the maws of the doors to hell opened up behind it, has but one avowed purpose in driving all this. Control. Control. Control the MONEY. Forget the cars. Create the chaos, and GET THAT MONEY. Hide behind the smoke of all the speculation about who is doing what, and what is going to become of this, and more, and more. All the while stalking the control of BILLIONS. For……. no one is really looking. And if they were, they don’t know where to look!
Cerberus has sent some of the best minds for cars…… down the highway. In replacing them, they bring in controversial Nardelli. And little else. In the scope of things, why not Nardelli? The perfect foil. A genuine whipping boy. A proven tarnished image boy, willing to absorb the disdain, insults, and yes, perceived failure. HIS failure. Keeping the hidden scheme of monetary manipulation firmly within Cerberus, and the political hacks who manipulated power, and thus, money while in public so called “service” and continue to do so now hidden from public view with their very real, very frightening connections to power that no one fully understands.
I was NEVER convinced that they truly intended to turn Chrysler into anything other than scattered bits that will only be memories of those of us who were lucky enough to have been there in a time B. E. That is Before Eaton.
I think ALLPAR can morph and survive into something else, once the onset of the shock has worn off. I can’t pretend that it won’t devastate some of us. Perhaps even the Webmaster. But, the Chrysler that we knew, that was destroyed by Daimler, curse you Mercedes-Benz, and was never really resurrected by Cerberus, is about gone. This time, it won’t be back. Barring a miracle.
Good posts. Even though CR & I have never seen eye to eye on Daimler, I have to agree with you here. I for one, never expected a long term solution from Cerberus, at least not a long term solution for Chryler other than to strip & turn. There will be many who disagree, saying that perhaps IF financial issues weren’t looming that Cerberus would be in it for the long haul. Yeah.. maybe. or maybe not. Like you state, we’ll never know unless someone has a deathbed confession. 3headed dogs are something for the circus or science to examine, never good as a pet.
I agree with the question, can GM survive even if it receives the benefit of Chrysler’s cash and technology?
Even with the Aura and Malibu it has yet to make a dent in Camry’s sales numbers. Even with great new products, Saturn and Buick have not achieved much in the way of sales increases vis a vis Toyota and Lexus. The biggest challenge remains convincing American buyers that they should try a domestic nameplate for something other than a body-on-frame truck. If GM and Ford can’t turn that around–it will be game over regardless of Wall street or Capitol Hill.
The upcoming Cruze seems to be a step in that direction–but it’s a whole year away. The Orlando would appear to be a good replacement for the HHR, but GM says it’s not coming to America. GM does have the Volt coming, but that won’t be a profitable car in the short-term. I think GM has to make some tough decisions–it probably should drop Pontiac and GMC, maybe even Buick, and put all the marketing resources, every spare dime into improving the image of quality on Chevrolet and Cadillac and Saturn. They need to be on TV and radio about every day pounding on quality and value and how they’re better than Toyota, how styling and interiors and features are better–which they are. But when they intend to market a Pontiac G3–badge engineered from the Aveo–it gives me a lot of doubt about them.
Ford’s awesome Fiesta and Euro Focus is also a year away. How I wish the time tables could be speeded up!
I agree we should get our “leaders” to focus on this (although I doubt they will act in any positive way on this issue–since they stood by in 1998 and are co-conspirators with the CEO’s on this $700 billion heist). But don’t ignore the effect of voting with our wallets. Americans and Canadians should remember every time they reject a Fusion or Malibu or Avenger, and follow their next door neighbor’s lead in buying that Camry or Accord, it is an American or Canadian factory worker that pays the price, it is the middle class that pays the price when good-paying jobs disappear. It’s time to support the home team.
What a sad day for everyone. I am old enough to remember DeSoto’s, Studebakers, and Ramblers. My parents at one time or another owned all three marques. I grew up with DeSoto,1, Dodge,4, Valiant,1,Caravan,2. I had hoped to purchase a Dodge Magnum as my next vehicle, (SXT, with a V6 and AWD, sunroof too!). Increasingly over the last few month’s as we have heard very little about any new product in the pipeline, I had begun to suspect trouble. I must agree with Curtis Redgap, follow the money, it will lead you to the truth. So here we are, proud North Americans who created the automobile culture, reduced to two flailing giants going down for the third time while the world passively watches, and perhaps, gloats.
The rest of the world is not gloating, aside from some foolish Britons who don’t (I suspect) represent the majority. It’s Americans who are gloating… Americans who seem to have no pride.
To paraphrase, those who say they love their country but hate the people who work in it… are no patriots.
A lot of people are angry at those darned union people for taking advantage of us for so long. Well, at $14 per hour, I find them a lot less darn-able than the guys who are taking millions in salary and bonuses while their companies lose money and customers.
Delphi, GM, Cerberus, and Chrysler… I’m looking at you…
Well the union certainly has been an issue over the years, but this goes so far beyond that - and anyway the union didn’t steal what they’ve gotten, it was given by the auto companies so if one is complicit the other is as well.
But this specific scenario is much more about the money movers in the high towers than anything about the union. Their party is over; the CEO’s probably not (see: AIG).
I never actually thought the Detroit Three would just implode, but we’re closer to that happening than it not happening. And that’s gonna have far, far reaching effects. A lot of people probably don’t even realise how far.
Yup.
(As a BTW, I was told a long time ago that in the UAW’s original sit-down strike, the one that established them for the first time, they demanded more control over work processes - the kind of thing that all the automakers are doing now with empowered work teams. However GM countered with more money in exchange for absolutely no control, using people as flexible robots. I don’t know how true that story is but it’s consistent with the “power means more than money” attitude I’ve often seen in the corporate world.)
This truly is a sad time. I’m 27 and have owned nothing but Chrysler Products since I was 16. My first car was a 1968 Dodge Polara. After I acquired the car I began to do some Research On Chrysler, and the more I read, the more proud I became. Since then I have owned 3 others, bought my first new Dakota SXT in 2002. Now I’m Looking at a new truck, (Dakota regular cabs just aren’t too practical)and have put those plans on hold. I just can’t buy anything from GM.
What is amazing to me is neither candidate has spoken out regards the attempt to sell Chrysler LLC to General Motors. This is a battle to save some semblance of the American automobile industry. The very industry that was in a large part instrumental in winning World War Two! It was the United States’ huge industrial base that won the war with major help from the fact that we depended on ourselves for the raw materials to do so.
Cerberus is all about the almighty dollar. Or maybe the Euro now. Yet no one seems to care that Chrysler and GM are very much about to close their respective doors, no matter what the outcome of the current negotiations. Nor do I believe that Ford can be a stand-alone survivor. Obviously neither does Kirk Kerkorian. With the massive influx of foreign manufacturers all vying to fill the holes in the market created by the folding of GM and Chrysler, Ford would be virtually snowed under.
Both candidates keep bantering about how they are going to save small business. That’s great but what about big business. I do not mean the money changers now in charge of all the “American” companies that use Asian factories to build product. I mean American manufacturers, those that have both factories and corporate HQ’s between the Atlantic and Pacific oceans and north of the Rio Grande. Yes I include Canada as our use of assembly plants on Canadian soil seems to have worked well for all.
There are tens of thousands manufacturing jobs on the line here. Jobs that pay living wages, have medical benefits and produce product. How are we going to replace those jobs? With low pay service jobs that have meager, if any, health benefits? Jobs in an industry that depends on a large pool of consumers that can afford to pay for such services? What pool? It will have disappeared with all the manufacturing jobs.
The Old Testament says the Yellow will inherit the earth. Believe in it or not, it just could work out that way in our automobile industry. Or maybe it will be a German – Asian alliance. Sound Familiar?
In keeping my eyes front, because I really don’t want to know what is catching up to me from behind. However, there may, just a slim may be some chance out of this mess. The media exposure has given us certain concrete issues to base some observations upon. Yes, I am totally in agreement with Mr. Hagan and Dave, with certainly a grateful nod to Dan. All the rest here are in the correct view as well.
A couple of points. It is painfully obvious that Cerberus got a quick education about the automobile business. Many a veteran learned practitioner within the industry has come and ………. gone. Most with far more acumen about cars than the money changers in the place where a 3 headed monster guards the door to the fiery depths of hell! In that I mean, they, sometime in the near past, came to the realization that they just don’t have the means to play in the arena. In fact, you could say they can’t even get into the parking lot of this tough business. Far be it for them to just admit it and try to fix it. No. Bluff, bluster, prevaricate, smile, and plainly seek to blow smoke in your face, and pump you from your backside. You may go political here and absolutely attribute all this to the mutts running the place. Think about them.
There were a lot of people fooled. Not so much here though. ALLPAR staffers were skeptical, critical, and remained dubious from the git go. That does not mean we didn’t want it to work. Quite the opposite. We desperately hoped against hope that it would work, and work far beyond any expectations.
We now know beyond any doubt that Cerberus is anxiously seeking a deal to get out. Any deal. It is a sad prospect, after so much higher expectations had been raised. Wrapped up in the same context, and fair warning has been served, is that we also know that Chrysler WILL cease to exist, and pretty darn soon. A lot sooner than we might expect. Cerberus has indicated it wants something before election day.
We also now know that General Motors is in dire straits. They are closer to tipping over the edge to oblivion than Chrysler or Ford. For a fact, uncomfortably close. They don’t even have enough cash to finish the deal in acquiring Chrysler.
Further, GM would get the 11 billion from Cerberus, BUT, it would be ill served because about 5 billion would be tied up in trying to shed Chrysler, it outlets, parts suppliers, unions, pensions, and medical costs. Another 2 billion would be tied up in engineering to see what bits from Chrysler and GM divisions MIGHT fit together. Leaving roughly half left for operational costs. With reports of GM burning through a BILLION a month, the Chrysler acquisition would net them maybe 6 months. Then, dead.
As of this time, GM is out. Chrysler is still up for grabs. Who is out there. A lot of companies. However, there is one connection that has already been made. And that might be the ends to the means for Cerberus, and the ultimate survival of Chrysler as a name.
Carlos Goshen. Fear not. I know we all panned him when some news came about Chrysler building the new truck for Nissan. However, HIS plan does not call for the demise of Chrysler. Think about it. He wants to make Chrysler the third part of his world triad, building it into a giant powerhouse in North America. Renault. Europe. Nissan. Asia. Chrysler. North America.
For Chrysler it would mean saving about 60,000 jobs, and keeping plants open that would HAVE to be closed if GM took over. Unfortunately for GM, it might mean the end of what was, at one time, the largest corporation in the world.
And Mr. Hagen is right about the candidates. I, however, wish to take his idea a bit further. Just what is the twit in the White House doing NOW, and I mean RIGHT NOW, for the domestic automobile industry? Is it possible he is so consumed with filling his cronies pockets with tax payers cash that he has overlooked the US car industry because they altogether only requested 25 BILLION, instead of 700 BILLION?? And of Congress? In eight years, neither party has come up with any thing except more regulation to stifle US auto industry growth. Is it not becoming crystal clear that the people in Government do not relate or care about the tax payer, worker, and you and I? Do you have to get run over by a Toyota not to see it? Well, if you don’t, just do nothing. That Toyota is coming FAST. Don’t move!!
However, scarier than that is the last comment of Mr. Hagan’s remarks. THAT…… ought to shake you to your core. Stating the obvious, Carlos Goshen aside.
Lets hope for the Nissan/Chrysler merger. Nissan already stated that it would like to merge with Chrysler instead of a buy out. Would that save the dual clutch and phoenix plans? Lets hope. Carlos Gohen could save this whole thing. I thing we all knew in the back of our heads that Cerberus was in this for the short haul now matter what they said. Esp when they named Nardeli to the top post. Lets all sit back and PRAY for the best.
I’ve said this a few times but I’ll say it again because I still don’t have an answer…what would GM really gain? Curtis laid the numbers out rather well - it just isn’t near enough cash and far too many headaches. That’s something that reinforces the idea that Cerberus is pulling all the strings here and GM is being played as much as Chrysler is.
When you look at the big picture of both companies, the economy, and the market…I can’t come up with a scenario that makes this work for anyone but Cerberus.
FWIW, this is why my optimism was cautious regarding the “New Chrysler” and why I repeatedly said to remember Cerberus exists to make money - not cars.
It’s all a matter of whether Cerberus thinks it’ll be smooth sailing in 2010-2011, I suspect.
My guess, again, is that Dodge and Jeep will survive. Chrysler and either Buick and/or Pontiac will go away at long last. Hummer’s already gone so all the talk about Hummer and Jeep synergies are just nutty. The Patriot will probably stay, the J-cars go, the Liberty will probably move to a GM platform (or vice versa, or they will merge), etc. The Grand Cherokee/Durango may be put onto the Traverse platform, Durango dropped. LY would probably replace G8 - or vice versa. Dodge heavy duty trucks beat the kajeebees out of GM’s and if Cerberus is in charge, not GM, they’d remain and the GMC line would be altered. GM is having problems today with STILL having too many versions of each vehicle…
Anyway, Cerberus is, as you say, pulling the strings. They can extort concessions from GM with their GMAC part-ownership in MANY ways, including denying profits from GMAC (or increasing losses) while not lending to GM buyers. They have the capital and I don’t mean Chrysler’s $11.5 billion. They have political clout, too - far more than GM. I don’t recall any discredited politicians or fundraisers being “adopted” by GM. (Also, of course, GM has been a very predictable political donor and I think their donations are taken for granted.)
“What would GM gain”? is not the question; it’s “What would Cerberus and a handful of top GM investors and executives gain?”
Nobody cares what a company gains, at least not in the United States. These deals are not made for the company as a whole. They are made for a small core of extremely wealthy people… of course there ARE exceptions to that. Verizon’s investments in FIOS reflect a CEO who cares about keeping his company alive in the long term. Steve Jobs is not about to sell Apple out.
In some ways this deal might be similar to Disney buying Pixar… Pixar’s owners finished in control of Disney. You can certainly see that in the personnel changes immediately afterwards - and in the amount of unreleased Disney “film” on the cutting room floor.
Good points! Cerberus, no matter who wins the election, will go on untouched. Yes, there are many pooches amongst the monied up few that cruise the hallways there. There are also enough skeletons collected and stored away in the same closets along those hallways that would absolutely prevent anyone of any political stripe to try to bring them to task! And for those very few exceptions that might not have a skeleton or maybe a small skeleton hanging somewhere, there would be enough money tossed about to invest in an unmitigated disaster for the person (s) that would seek to expose the plots handled by the money changers. Believe it.
Thanks to the unrelenting rotting corpse of corruption, this country has long gone away on any ideals or respect for the law. Passing more laws means nothing. Especially when the people elected to do the passing build in their own loop holes to escape proceedings that might come against them. It is not a matter anymore of being “honest” “trustworthy” “statesman”. No. It is getting away with as much as you honestly can steal without getting caught. Being trustworthy so as to not turn what you know about the fellow conspirators inside to allow you to get more from the public purse. Playing statesman to the stage of sound bytes, misdirected spin that lack substance but get attention to divert issues that truly mean something. And sadly, we just keep electing the same mutts over and over…….
And Disney? A sad pox upon the landscape. Disney World here in Florida is not the mecca of fun that it purports itself to be. It is the biggest single private employer. It pays diddily. I can not fathom how anyone can survive on 6-8 dollars an hour. That is the offered wages for employees. As such, it seeks to subvert ANY other form of employment except those businesses that seek to compliment the tourist trade. And what competition to WDW there is, gets direct competition (or sued) from WDW. Thus, has held Central Florida in particular to its slave like minimums, and continues to do so. It took YEARS and plenty of influence (tons of cash) to get a pretty good sized medical industry here, in the Burnham Institute. As a result, the VA is (FINALLY) building a hospital in the same campus, and two other large medical companies are also building research and medical hospitals on the same lands. The winner, the people of the area.
The main point being is that someone did pull the strings. And the Cerberus connection to GM and Chrysler seems so obvious to me. In the end, it may seem that GM got Chrysler, however, it will be Cerberus overall. They will still control the finances, get the government to save GM, and bank tons of cash in the exchange. What a good deal for Cerberus. Aren’t you just ecstatic for them? Don’t you just want to roll over and let someone scratch your belly and curl your toes with pleasure? Well …. I for one, DO NOT. If the economy falls out, I really hope that places like Cerberus are the FIRST to get it, and get it hard! A total dump, a flush, and out to the cesspool. A region that are familiar with anyway.
We need to know GM’s plan for Chrysler before any taxpayer money is handed over. If this is about gutting Chrysler, killing jobs and saving Bush/Paulson buddy John Snow’s ass. No way.